Principal function test for composite machinery controls classification of photo composing keyboards and supports customs exemption.

Off-line English/Devnagari keyboards imported with photo composing machines were treated as integral components of a composite printing unit used in the printing industry. Applying Section Note 3 to Section XVI and Note 5 to Chapter 84, classification followed the machine's principal function, which was photo composing/type-setting, rather than treating the keyboards as separate data processing equipment. On that basis, the goods were classifiable under Heading 84.34 and satisfied Notification No. 114/80-Cus., which covered photo composing machines with keyboards for use in the printing industry. The Revenue's contrary classification and exemption challenge failed.

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Issues: Whether the 4 Nos. of VDI off-line keyboards for English/Devnagari imported with photo composing machines were classifiable under Heading 84.34 of the Customs Tariff Act, 1975 or under Heading 84.51/55(2), and whether they were entitled to the benefit of Notification No. 114/80-Cus. dated 19-6-1980.

Analysis: The imported keyboards were found to be designed for use with the photo composing machines and to form part of a composite unit used in the printing industry. In determining classification, Section Note 3 to Section XVI and Note 5 to Chapter 84 required the machine to be classified according to its principal function. The machine's principal function was photo composing/type-setting for printing, and the keyboards were treated as integral to that function rather than as separate data processing equipment. The notification covered photo composing machines with keyboards for use in the printing industry, and the imported goods satisfied that description.

Conclusion: The 4 off-line keyboards were correctly classifiable under Heading 84.34 and were eligible for the benefit of Notification No. 114/80-Cus. The Revenue's contention failed.

Ratio Decidendi: For classification of a composite machine, the principal function governs, and components integral to a photo composing machine used in the printing industry are to be classified with the machine under Heading 84.34, attracting the corresponding exemption notification.

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